Benefits of owning a home versus renting

Owning a home

Income Tax Savings  

Because of income tax deductions, the government is 
subsidizing your purchase of a home. All of the interest 
and property taxes you pay in a given year can be 
deducted from your gross income to reduce your taxable 
income.

For example, assume your initial loan balance is $150,000
with an interest rate of eight percent. During the first 
year you would pay $9969.27 in interest. If your first 
payment is January 1st,your taxable income would be almost 
$10,000 less – due to the IRS interest rate deduction.

Property taxes are deductible, too. Whatever property 
taxes you pay in a given year may also be deducted from 
your gross income, lowering your tax obligation.

Stable Monthly Housing Costs

When you rent a place to live, you can certainly expect 
your rent to increase each year – or even more often. 
If you get a fixed rate mortgage when you buy a home, 
you have the same monthly payment amount for thirty years. 
Even if you get an adjustable rate mortgage, your payment 
will stay within a certain range for the entire life of the
mortgage – and interest rates aren’t as volatile now as they
were in the late seventies and early eighties.

Imagine how much rent might be ten, fifteen,or even thirty 
years from now? Which makes more sense?

Forced Savings

Some people are just lousy at saving money, and a house is 
an automatic savings account. You accumulate savings in two 
ways. Every month, a portion of your payment goes toward 
the principal. Admittedly, in the early years of the mortgage, 
this is not much. Over time, however, it accelerates.

Second, your home appreciates. Average appreciation on a home 
is approximately five percent, though it will vary from year 
to year, and in some years may even depreciate. Over time, 
history has shown that owning a home is one of the very best 
financial investments.

Freedom & Individualism         

When you rent, you are normally limited on what you can do 
to improve your home. You have to get permission to make
certain types of improvements. Nor does it make sense to 
spend thousand of dollars painting, putting in carpet, 
tile or window coverings when the main person who benefits 
is the landlord and not you.

Since your landlord wants to keep his expenses to a minimum, 
he or she will probably not be spending much to improve the 
place, either.

When you own a home, however, you can do pretty much whatever 
you want. You get the benefits of any improvements you make, 
plus you get to live in an environment you have created, not
some faceless landlord.